Gold futures posted wild 2-sided trade late Wednesday before turning lower for the session after the Federal Reserve decided to cut its benchmark interest rate 25-bpts as it remained deeply divided on the need for further easing as the economy improves.
The Fed took down its benchmark overnight lending rate to a target range of 1.75% to 2.00%. But, according to the Fed’s “dot plot” of individual expectations, 5 members thought the FOMC should have held its previous range of 2.00% to 2.25%, 5 approved of the 25 bpt cut but keeping rates there through the rest of the year, and 7 favored at least 1 more cut this year.
The FOMC again cited “the implications of global developments for the economic outlook as well as muted inflation pressures” as the primary rationale for Wednesday’s cut.
At 19:14 GMT, December Comex gold futures are trading $1497.10, down $16.30 or -1.08%.
Daily Technical Analysis
The main trend is down according to the daily swing. A trade through $1566.20 will change the main trend to up. The next main bottom target is $1412.10, but sellers are going to have to take out a Key Fibo retracement before the market gets there.
The short-term range is $1566.20 – 1490.70. Its Fibo retracement zone at $1528.50 – 1537.40 is Key resistance.
The main range is $1412.10 – 1566.20. Its retracement zone at $1489.10 – $1471.00 is the next Southside target. Trader reaction there will determine the near-term direction of the gold market.
Daily Technical Forecast
Based on the early price action and the current price at $1497.10, the direction of the Dec COMEX gold market into the extended close is likely to be determined by trader reaction to the Key 50% mark at $1489.10.
The Bearish Outlook
A sustained move under $1489.10 will indicate sellers. Crossing to the weak side of the downtrending Gann angle at $1486.20 will indicate the selling is getting stronger with additional targets an uptrending Gann angle at $1478.10, followed by a Fibo mark at $1471.00.
The Bullish Outlook
Holding the Key 50% mark at $1480.10 will indicate that buyers are coming in to support the market. If this creates enough Northside momentum then look for the rally to extend into the uptrending Gann angle at $1506.40. Overcoming this angle will indicate the buying is getting stronger with the next target angle is at $1526.20.